Question

Peanut Company acquired 90 percent of Snoopy Company's outstanding common stock for $299,700 on January 1, 20X8, when the book value of Snoopy's net assets was equal to $333,000. Peanut uses the equity method to account for investments. Trial balance data for Peanut and Snoopy as of December 31, 20X8, are as follows Peanut Company Snoopy Company Debit Credit Debit Credit $162,000 180,000 205,000 351,900 211,000 710,000 188,000 44,000 216,000 84,000 $85,000 84,000 83,000 Cash Accounts Receivable Inventory Investment in Snoopy Stock Land Buildings and Equipment Cost of Goods Sold Depreciation Expense Selling & Administrative Expense Dividends Declared Accumulated Depreciation Accounts Payable Bonds Payable Common Stock Retained Earnings Sales Income from Snoopy 96,000 182,000 113,000 9,000 38,000 22,000 $ 446,000 57,000 183,000 489,000 313,900 791,000 72,000 $18,000 42,000 79,000 185,000 148,000 240,000 Total $2,351,900$2,351,900 $712,000 $712,000

Answer 1

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				Consolidation Entries
		Peanut	Snoopy	Debit	Credit	Consolidated
Sales		$   791,000	$ 240,000			$   1,031,000
Less: COGS		$ -188,000	$-113,000			$     -301,000
Less: Depreciation Expense		$    -44,000	$    -9,000			$       -53,000
Less: Selling and Admin Expense		$ -216,000	$ -38,000			$     -254,000
Income from Snoopy		$     72,000	$            -	$ 72,000		$                 -
Consolidated Net Income		$   415,000	$    80,000	$ 72,000	$           -	$      423,000
NCI Net Income				$    8,000		$         -8,000
Controlling interest in Net income		$   415,000	$    80,000	$ 80,000	$           -	$      415,000
Statement of Retained earning:
Beginning Balance		$   313,900	$ 148,000	$148,000		$      313,900
Net Income		$   415,000	$    80,000	$ 80,000	$           -	$      415,000
Less Dividend declared		$    -84,000	$ -22,000		$ 22,000	$       -84,000
Ending Balance		$   644,900	$ 206,000	$228,000	$ 22,000	$      644,900
Assets:
Cash		$   162,000	$    85,000			$      247,000
Accounts Receivable		$   180,000	$    84,000			$      264,000
Inventory		$   205,000	$    83,000			$      288,000
Investment in Snoopy		$   351,900			$351,900	$                 -
Land		$   211,000	$    96,000			$      307,000
Building and Equipment		$   710,000	$ 182,000		$    9,000	$      883,000
Less: Acc Dep		$ -446,000	$ -18,000	$    9,000		$     -455,000
Total Assets		$1,373,900	$ 512,000	$    9,000	$360,900	$   1,534,000
Liabilities and Equity:
Accounts Payable		$     57,000	$    42,000			$        99,000
Bonds Payable		$   183,000	$    79,000			$      262,000
Common Stock		$   489,000	$ 185,000	$185,000		$      489,000
Retained Earnings		$   644,900	$ 206,000	$228,000	$ 22,000	$      644,900
NCI in net asset of Snoopy	Working below				$ 39,100	$        39,100
Total Liabilities and Equity		$1,373,900	$ 512,000	$413,000	$ 61,100	$   1,534,000
NCI in net asset of Snoopy:
NCI Amount 10%	299700/90%*10%	$     33,300
Net Income	80000*10%	$        8,000
Dividend	22000*10%	$      -2,200
NCI in Net Assets of Snoopy		$     39,100